In this passage, Jesus was correcting Peter but at the same time he was warning the mob that had come out to arrest Him (Matthew 26:55). He was letting them know that the path of violence that they had chosen would only bring more destruction upon themselves (Luke 19:41-44). Jesus' recommendation to put the sword back into its place falls in line with what we read in Isaiah 2, among other passages, about the non-violent nature of the kingdom.
Many, such as Paul, have pointed out how the sword of the Christian is not a weapon of fleshly war but the word of God (Ephesians 6:12, 17; cf. 2 Corinthians 10:3-6). The writer of Hebrews even explained, “For the word of God is living and active and sharper than any two-edged sword, and piercing as far as the division of soul and spirit, of both joints and marrow, and able to judge the thoughts and intentions of the heart” (Hebrews 4:12).
But in regards to wielding this sword, the Bible offers this caution: “Let not many of you become teachers, my brethren, knowing that as such we will incur a stricter judgment” (James 3:1). Jesus' comment towards Peter also, in a sense, applies to how we use the word of God: he who takes up the sword shall perish by the sword. In other words, when you study the Bible, and especially when you teach it, you just don't read it, it reads you. It exposes your attachments to the flesh, it reveals your shortcomings, it judges the thoughts and the intents of the heart.
This can also be applied when you use the Bible to judge others. Jesus warned, “Do not judge so that you will not be judged. 2 For in the way you judge, you will be judged; and by your standard of measure, it will be measured to you” (Matthew 7:1-2). Carl Ketcherside wrote,
“When we postulate a program of justification by knowledge we hang ourselves on the gallows we have constructed to rid ourselves of others, unless we are prepared to make ourselves even more ridiculous by affirming that we know as much as God.”Carl Ketherside, “Another Gospel,” Mission Messenger 27, no. 1 (January 1965): 6-7 – Quoted in Dallas Burdette's Old Texts Through New Eyes (Xulon)